In 30 seconds
- Basic-rate relief of 20% is added automatically: pay £80, get £100 in your pension.
- Higher-rate and additional-rate taxpayers can claim an extra 20% or 25%, usually through Self Assessment, on contributions under relief at source.
- If your scheme uses net pay, you get full relief straight away through your payslip.
- You get relief on contributions up to 100% of your earnings, or £3,600 a year if you have no earnings, within the £60,000 annual allowance.
Key figures
Rates for England, Wales and Northern Ireland, 2026/27. Scotland has different bands.
The basic idea
Money you pay into a pension comes out of income you have not been taxed on. The government does this through "tax relief": it gives back the income tax you paid, or lets you skip paying it in the first place.
How you get the relief depends on how your pension takes contributions. There are two main methods.
Relief at source: pay £80, get £100
This is how personal pensions, SIPPs, stakeholder pensions and some workplace pensions work.
- You pay in from your take-home pay, after tax.
- Your provider claims 20% basic-rate relief from HMRC and adds it to your pension.
- So £80 from you becomes £100 in your pension. The £100 is called the "gross" contribution.
This happens automatically. You get the 20% even if you pay no income tax at all, on contributions up to £3,600 gross a year.
The catch is for higher earners. Your provider only claims 20%. If you pay 40% or 45% tax, the rest is not added automatically. You have to claim it from HMRC, usually through your Self Assessment tax return.
Net pay: full relief through your payslip
Many workplace pensions use "net pay". Your employer takes your contribution from your salary before working out your income tax. You get relief at your highest rate straight away, with nothing to claim.
Look at your payslip. If your pension contribution is taken before tax is calculated, it is net pay. If your pension provider's statement shows a "tax relief" top-up being added, it is relief at source.
Worked examples (England, Wales and Northern Ireland, 2026/27)
Each example is someone paying £10,000 gross into a pension under relief at source, so they pay £8,000 themselves.
| Salary £45,000 | Salary £70,000 | Salary £110,000 | |
|---|---|---|---|
| Paid in by you | £8,000 | £8,000 | £8,000 |
| Added by provider (20%) | £2,000 | £2,000 | £2,000 |
| Total in your pension | £10,000 | £10,000 | £10,000 |
| Extra relief you can claim from HMRC | £0 | £2,000 | £4,000 |
| Real cost to you | £8,000 | £6,000 | £4,000 |
At £45,000 all income is in the basic-rate band, so 20% is all there is. At £70,000 the whole £10,000 comes out of income taxed at 40%, so you can claim another 20%.
The £110,000 example: why relief can reach 60%
Between £100,000 and £125,140, you lose £1 of your £12,570 Personal Allowance for every £2 you earn. That makes the effective tax rate in this band 60%.
Pension contributions reduce your "adjusted net income", the figure used for this test. Paying £10,000 gross into a pension takes someone on £110,000 down to £100,000 and gives them back £5,000 of Personal Allowance. Total relief: £6,000 on a £10,000 contribution. The pension costs them only £4,000.
This is one of the most valuable tax reliefs available. It is also one of the most commonly missed, because under relief at source you must claim it.
How to claim higher-rate relief
- If you fill in a Self Assessment return, enter your gross contributions to relief-at-source pensions in the pension section. HMRC adjusts your tax bill.
- If you don't, use HMRC's online claim service for the current tax year, or claim by post. HMRC may adjust your tax code so you get the relief through your salary.
- Earlier years can often be claimed too, generally within HMRC's four-year time limit, if you have proof of what you paid. It is worth checking if you have been a higher-rate taxpayer for a while.
The limits
- 100% of your earnings. You get relief on contributions up to your total UK earnings for the year. With no earnings, the limit is £3,600 gross (£2,880 from you).
- The annual allowance: £60,000. This is the most that can go into your pensions in a tax year, from you and your employer together, before a tax charge applies. You may be able to carry forward unused allowance from the last three tax years.
- A lower allowance for very high earners. If your "threshold income" is over £200,000 and your "adjusted income" is over £260,000, your annual allowance is tapered down.
- £10,000 once you have taken taxable money flexibly. After you start drawing taxable income from a defined contribution pension, the money purchase annual allowance of £10,000 usually applies.
Scotland is different
Scottish taxpayers have more income tax bands. Your provider still adds 20%, even if your Scottish rate is 19%. If you pay Scotland's intermediate, higher, advanced or top rate, you can claim extra relief of 1%, 22%, 25% or 28%, matching income taxed at 21%, 42%, 45% or 48%. Our calculator does not cover Scottish rates yet.
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Open the calculatorCommon questions
Do I have to claim basic-rate relief?
No. Under relief at source your provider claims the 20% from HMRC and adds it to your pension. Under net pay, your employer takes the contribution before tax, so the relief is already in your payslip.
How far back can I claim higher-rate relief?
Through Self Assessment you can claim for the current year and earlier years, generally within HMRC's four-year time limit, with proof of your contributions. HMRC's online claim service only covers the current tax year.
Does the 20% top-up apply if I don't pay tax?
Yes, under relief at source. Non-taxpayers still get basic-rate relief on contributions up to £2,880 a year net (£3,600 gross).
I live in Scotland. Is it different?
Yes. Your provider still adds 20%, even if your Scottish rate is 19%. Higher Scottish rates can claim extra relief of 1%, 22%, 25% or 28%.
Sources
This guide is general information, not personal financial advice. Rules can change and your situation may differ. For free, impartial help, contact MoneyHelper, or speak to a regulated financial adviser.
